How are LLCs Taxed in Florida?

The ability to choose how an LLC is taxed is one of its biggest advantages and LLCs in Florida offer incredible flexibility when it comes to taxation.

Disclaimer: I am not an attorney or accountant. Nothing in this article should be taken as legal or financial advise, only as informational. 

By default, an LLC is treated as a pass-through entity, meaning its profits and losses pass through to the owners and are reported on their personal tax returns, avoiding double taxation (except for C-corps). And while this may seem easier, it can be costly as the company becomes more profitable and the owners are paying self-employment taxes on both their earnings and their profits.

That’s why tax elections are important to understand and use, depending on your circumstances and company structure.

Here’s a breakdown of how LLCs are taxed in Florida, including various scenarios and elections:

Default Taxation for Florida LLCs

Single-Member LLC

By default, a single-member LLC is taxed as a sole proprietorship. It is considered a disregarded entity for federal tax purposes, meaning the IRS doesn’t recognize the LLC as separate from its owner.

How It Works: The LLC as a disregarded entity doesn’t file a separate federal tax return (unless is elects corporate tax status, see below). Profits and losses are reported on the owner’s personal tax return using Schedule C of Form 1040. The owner pays self-employment taxes on the LLC’s net income.

Note: if the LLC is owned by another LLC, it works the same, the profits are passed to the parent company LLC to be reported on it’s taxes.

Multi-Member LLC

By Default, a multi-member LLC is automatically taxed as a partnership. It is treated as a pass-through entity for federal taxes.

How It Works: The LLC files an IRS Form 1065 (Partnership Return) to report the total income, deductions, and credits. Each member receives a Schedule K-1, detailing their share of the LLC’s profits or losses. Members report this on their personal tax returns and pay self-employment taxes on their earnings.

Husband-Wife LLCs

If a husband and wife own an LLC, their tax treatment depends on how the LLC is organized. Florida is not a community property state, so a husband-wife LLC is generally treated as a multi-member LLC (partnership) by default.

However, if the couple elects Qualified Joint Venture status with the IRS, they can file as a single-member LLC for federal tax purposes, simplifying reporting.

Electing Corporate Tax Status

LLCs can choose to be taxed as either an S Corporation (most common) or a C Corporation by filing the appropriate forms with the IRS.

S-Corporation Election

An LLC can elect to be taxed as an S Corporation by filing Form 2553 with the IRS. S-Corp is the common election for smaller and single-member LLC businesses.

Why Choose S-Corp Status?

S-Corp taxation allows members to divide income into salary (subject to payroll taxes) and distributions (not subject to payroll taxes), potentially reducing self-employment taxes.

How It Works:

The LLC files a Form 1120-S to report the business’s income. Members report their salary on Form W-2 and distributions on Schedule K-1.

C-Corporation Election

An LLC can also elect to be taxed as a C Corporation by filing Form 8832 with the IRS. This is typically used only by larger businesses or in unique circumstances. C-Corp taxation is advantageous if the business intends to reinvest profits back into the company rather than distributing them to members.

It provides access to certain corporate tax benefits, like lower federal corporate tax rates and deductions for benefits provided to employees. However, it has double taxation as the C-corp pays federal corporate taxes on its profits, and then the members pay taxes on their dividends (profits received). Talk to an accountant if you think this might be the choice for you.

 

Understanding Florida Taxes and Terms for LLCs

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Tax Elections

Tax elections allow LLCs to tailor their tax treatment to suit their financial and operational needs. If an LLC doesn’t choose one, it will automatically use the default taxation.

Tip: If your LLC will be providing a profit of over $80,000, it is generally a good idea to elect S-corp status.

Self-Employment Taxes

Owners of LLCs taxed as sole proprietorships or partnerships (did not elect S-corp and taxed by default) must pay self-employment taxes (15.3%) on their share of the LLC’s income.

Quick Calculation: 15% of $100,000 is $15,000 for self-employment tax. If you elect S-corp, and pay yourself $50,000, you pay half of the self-employment tax and the remainer is considered profit (rather than taxed as income).

No Personal Income Tax

Florida does not impose a personal income tax, which benefits LLC owners who report business income on their individual tax returns.

LLCs taxed as sole proprietorships, partnerships, or S Corporations generally do not pay corporate income taxes in Florida.

Corporate Income Tax

If an LLC is taxed as a C Corporation, it must pay Florida’s corporate income tax on its profits. As of 2025, Florida’s corporate income tax rate is 5.5%.

Florida Sales Tax

LLCs that sell goods or taxable services in Florida must register for a Sales Tax Certificate and collect sales tax from customers.

Florida Employment Taxes

LLCs with employees must register for and pay state unemployment taxes and withhold payroll taxes.

Startups – How to Choose

Again, I am not an accountant or lawyer so this is just an informational perspective. Find Accounting Services in the Florida Smart Business Directory

Obviously, your tax elections depend on your own unique situations. But here’s the general gist of what to do if you just started an LLC.

If you believe that you, as a single-member LLC, or you and your partners will equally earn over $80,000 per year from your business, it will almost definitely be worth electing an S-Corp tax status with the IRS.

If you are just starting out slow, or moving from a ficticious name to an LLC for liability purposes, and you likely will make less than $80,000 per year from your business, save yourself the hassles and stick with the default disregarded entity status.

S-Corps must file their own tax return and it is more expensive, both with your own accountant and online services, to file than it is for personal tax returns. And it is more expensive because it is much more complicated. So if you are not sure, stick with the default, and pay the taxes through your personal return.

You can always elect to change it later.

 

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